Tesla boss Elon Musk says that to maintain company's growth in face of
rising interest rates, he is ready to sacrifice profitability
After
pricing adjustments made throughout the first quarter resulted in an
additional sales gain, Tesla reduced the prices of every vehicle it sells in
the US once more.
Each version of the company's more popular Model 3 and Y electric
vehicles received a minimum $1,000 discount, and variants of its more
expensive Model S and X vehicles received a $5,000 discount. It also
unveiled a new Model Y base model with a starting price of $49,990.
Following lineup cuts in mid-January, this is Tesla's second
significant price reduction of the year, Reuters reported.
Tesla
boss Elon Musk has stated that in order to maintain the company's growth in
the face of rising interest rates and a potential recession, he is ready to
sacrifice the company's profitability. In contrast to established players
like Ford Motor Co. and more recent entries like Rivian Automotive and Lucid
Group, the company has the unusual advantage of having high-profit margins
to deal with, a Bloomberg report said.
Musk stated during an earnings call on January 25 that orders
were growing at a rate that was almost twice as fast as production following
Tesla's first lineup-wide price decreases early this year. Deliveries
increased by nearly 4% over the fourth quarter, and Tesla produced almost
18,000 more cars than it delivered to consumers. However, the business was
unable to maintain this supply-demand dynamic.
Tesla delivered
just 10,695 of the Model S and X in the quarter, the lowest number since the
third quarter of 2021, despite a second round of reductions to those models
in early March.
Since the beginning of the year, Tesla has
decreased the price of each of those vehicles by at least $20,000 and as
much as $34,000.
The US manufacturer similarly reduced the price of automobiles
earlier this year in China, sparking a price battle in the biggest market
for new-energy vehicles worldwide. According to preliminary figures given
earlier this week by China's Passenger Car Association, it exported a total
of 88,869 vehicles from the Shanghai factory in March.
In China,
a base Model 3 starts at 229,900 yuan ($33,400), while the Model Y starts at
261,900 yuan ($38,086). As a result, there is still a sizable pricing
difference between the two Tesla models.
